Nationwide is poised for a tense annual meeting today that will see chief executive Debbie Crosbie cement her controversial takeover of Virgin Money and put in rules to increase her own pay.
The board is recommending moves to pay the CEO and finance chief Chris Rhodes three times their salary in bonuses, up from a mere doubling now.
Critics who are against the £2.9 billion deal to buy Virgin – where Crosbie used to work – see this a further sign that the building society is becoming ever more like the banks Nationwide mocks in TV ads.
Nationwide’s 16 million members do not get a say on either the Virgin deal or the new pay deals, beyond an advisory role.
There are other adjustments to society rules, including a move to let directors stand past the age of 70 – director Phil Rivett is 69 and Alan Keir is soon 66. There is also a removal of the requirement on directors who become patients of mental homes to cease being in office.
The board will also be given new powers to raise capital and pursue deals without recourse to the members who in theory own the building society.
Rebel member Jay Smith said: “The changes effectively empower the CEO and CFO (rather than a matter reserved for the board) to make bigger / bolder moves when it comes to capital and funding. The gravy train has not only got bigger by their own design, but the stokers have chosen to give themselves even bigger shovels.”
Last year Crosbie was paid £3.5 million at Nationwide for her first ten months in charge, a record for the mutual sector.
David Duffy, the CEO of Virgin Money, will have made £30 million from his six-year tenure at the challenger bank once the takeover goes through.
One former VM board members described the company as “a bonus scheme with a bank attached”.
Last week it emerged that Mikael Armstrong, the member who has led the way in campaigning against the Virgin deal, revealed he has been “debanked” by Nationwide.
His accounts were frozen in April. A coincidence, Nationwide insists.
He says: “It's highly unlikely to be a coincidence. They gave me no reasons or justifications.”
Nationwide is likely to win its vote today despite the objections of some members.
On the plan to raise executive bonuses, a spokesman said: “The vote is advisory pursuant to the corporate governance code and is consistent with the approach taken by companies with shareholders. This is common practice at AGMs and is not particular to Nationwide or mutual organisations.
On the removal of age limits, Nationwide said: “We are proposing to remove the Rules relating to age limits to align with Equality legislation. The current requirement for a Director to cease to hold office (and associated definition of ‘mental patient’) is removed on the basis that the concept is outdated and there are remaining Rules that provide for the variety of circumstances in which a Director would cease to hold office.”
The results will be known this afternoon. While Nationwide is sure to win, the size of the rebellion from angry members will be interesting.
Nationwide, founded in 1884, says the Virgin deal will make it a new power in banking. It intends to run VM as a separate business for four years however, suggesting it is concerned about the assets it holds.
